Breach of license agreement scam using the names Allen Chen and Bioway Corporation

Date First Reported: April 2014

Primary Name Associated: Allen Chen

Description of Potential Fraud:

A dozen lawyers in Ontario and the U.S. have reported to us that they’ve been contacted by the purported Allen Chen of Bioway Corporationwith regards to retaining their services to collect on a breach of a copyright agreement.

This is a classic bad cheque scam that presents as legal matter requiring the assistance of a lawyer. In this scam lawyers will be duped into wiring real funds from their trust accounts after depositing a fake cheque received as payment from the party in breach of the agreement (who is also part of the fraud). See our Confirmed Fraud Page for more of an explanation of how these frauds work and to see other names associated with it. Our Fraud Fact Sheet lists the red flags of a bogus legal matter that is really a fraud.

Here is the initial contact email sent by the fraudster to the lawyer and subsequent response:

I am contacting you in regards to a breach of license agreement, unfair competition, and trademark infringement with a client in your locale. Our client was granted an exclusive license to use and modify our Japanese language software products to create and manufacture English language versions of the Products and derivative products in the English language, and the exclusive rights to distribute the English language versions of the Products throughout the USA. However, it was later uncovered that our client was equally manufacturing the Spanish language of our product without license. In addition, our client was equally distributing the unauthorized products within and to other regions outside USA and this is a complete violation of our agreed terms.
On behalf of my company, I will like to enforce our intellectual property rights with respect to the unauthorized production of the versions of our products in Spanish language and the unauthorized distribution of the products within and to other regions outside USA . If these falls under the scope of your practice and my request could be reasonably accommodated, please contact me as soon as possible so that I can provide you with further details. Otherwise, if you are not in a position to assist on these issues, your advice on the appropriate measures to take could be of assistance.
I will appreciate your prompt response. Thank you.
Warmest regards,
ALLEN CHEN
President/Ceo
BIOWAY CORPORATION.
Address: 3rd FLOOR, NO. 169-6, SEC
CHANGAN EAST ROAD IN TAIPEI 2 TAIWAN
TELL: 02-2771-2196
FAX: 02-2741-3770
WEBSITE: http://www.bioway.com.tw

Replying to the email brought this response:

This is an official request for your services on behalf of my company towards the enforcement of our intellectual property rights. We have a contract manufacturing agreement with Merck & co.,Inc for the manufacture, supply and distribution of our medical and pharmaceutical products to consumers USA . These medical and pharmaceutical products or devices are embedded or preloaded with our proprietary softwares coded in Taiwanese language but equipped with a Taiwanese to English language translator from our factory or assemble plants here in Taiwan before being shipped to the USA. You may visit our company website http://www.bioway.com.tw to intimate yourself with our products and operations., Below find the company full information..

MERCK CO., INC.
401 TERRY AVE.
SEATTLE, WA 98104

However, as a result of increased market demand for our medical and pharmaceutical devices in USA and to make our products compete more favourably with other products, there was the need to have the embedded softwares written in English language. It was considered that these will remove several inefficiencies as result of translation from Taiwanese to English language. As a result of the foregoing, we enter into a copyright license agreement with our client for the translation of our software programs from Taiwanese to English language for our medical and pharmaceutical devices. As result of the foregoing, we entered into a copyright license agreement with our client in Aug 2011 for the translation and development of our software programs in English language.

However, in Dec. 2012 during a schedule facility and inspection tour by our audit consultant from Taiwan to our client manufacturing facility in USA, it was uncovered that our client was equally manufacturing the Spanish language versions of our product without license. In addition, our client was equally distributing the unauthorized Spanish language versions of our products within and to other regions outside of USA and this is a complete violation of our agreed terms.

Following the initial discovery by our audit consultant, a detail investigation was carried and it was uncovered and confirmed by our client that 250,000 copies of the Spanish language version of the software

programs have been produced and 200,000 shipped and sold already in Mexico. After this agreement was breached, we had a lengthy negotiation, and consequently it was mutually resolved and agreed that sixty-five percent (65%) earned profits on the unauthorized production should be payable to us and payment deadline of 30th of September, 2013 was agreed. However, the deadline date was extended to 28th of January, 2014 as requested for by our client.

Quite unfortunately, the extended deadline was not been honoured. Attached is a copy of our copyright license agreement with Merck Co., Inc.

Despite the foregoing, I will like to draw your attention to the relationship with our client which has been cordial and we have had a successful business relationship over the past few years, and it is our position to maintain the relationship after settling the issues on hand. Right now, I will like to take appropriate steps and measures to enforce our copyright license agreement and/ or claim infringements and damages as appropriate.

If your firm is retained, our expectation of your services for now will be within the scenario of a engagement letter to our client. This approach will trigger the much needed response from our client towards amicable settlement otherwise we will not hesitate to go into court litigation. We are prepared to pay your retainer fees.

Litigation may be introduced as a last resort when options have been exhausted. Please time is of the essence for us now.

We look forward to your prompt response and you may send your retainer document as well.

If you have been targeted by any of these frauds, please forward any of the emails and supporting documents that you have received to [email protected]

If you suspect you are acting on a matter that might be a fraud, call LAWPRO at 1-800-410-1013 (416-598-5899). We will talk you through the common fraud scenarios we are seeing and help you spot red flags that may indicate you are being duped. This will help you ask appropriate questions of your client to determine if the matter is legitimate or not. If the matter you are acting on turns out to be a fraud and there is a potential claim, we will work with you to prevent the fraud and minimize potential claims costs.

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